Does the 3% SDLT surcharge apply where a beneficiary occupies trust property?
3% Additional Rate, Settlements
“I am acting for the trustees of a will trust and they are buying a property for one of the beneficiaries to live in. The property will be held in the names of the trustees but occupied by the beneficiary. Do they have to pay the additional 3% and would putting the property in the sole name of the beneficiary who does not have any other property negate this.”
Source: BLG Member
Where the trustees of a settlement purchase a major interest in a dwelling and, under the terms of the settlement, a beneficiary is entitled either to occupy the dwelling for life or entitled to the income earned in respect of it (a ‘trust for life or income’) that beneficiary is treated as the purchaser for the purposes of the additional rate. The additional rate ‘tests’ will be applied to the beneficiary but the trustees will be liable to file the SDLT1 and pay the tax (including the additional 3% where it is chargeable).
If the settlement is not a trust for life or income, the trustees are treated as the purchasers and, in the same way as purchasers who are not individuals, are liable to the additional 3% on the acquisition where the chargeable consideration is £40,000 or more and the property is not subject to a lease with an unexpired term of more than 21 years even if they own no other dwellings.
So it is not a question of whose name the property is in but what the terms of the settlement are. The rules for bare trusts are different.
At the time of publication this response was correct however as tax legislation and practice change from time-to-time you should take specific advice before taking any action.
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